Right now, there’s an interesting trend taking place in the SaaS world. For software vendors, It’s becoming increasingly clear that customers not only want to buy software technologies that are affordable, scalable, and interoperable, but also want to buy solutions that offer the most value.
The question “which software to buy?”—all-in-one vs best-of-breed—is as old as SaaS. Though there are perceived upsides to point solutions like domain-specific features, easy implementation, and low upfront cost—those benefits may not be limited to point solutions or best-of-breed products
It’s not right to assume that all-in-one solutions do not offer specialized or nuanced features.
To us, it clearly looks like the future belongs to consolidated all-in-one suites because business functions are evolving to be more collaborative in nature. There are other factors that signal similar conclusions.
In this post, we will look at why all-in-one solutions are the best—both for the makers and buyers—and where best-of-breed apps fail.
Why best-of-breed software are popular
It’s hard to ignore the excitement that micro-SaaS founders are creating in the software circles. If you have a business problem no matter how small, it’s likely that there’s a dedicated SaaS platform built to nurse that pain.
Take for example Metaverse Startup Project (ensures traveling between individual meta lounges) or a tool that rewards employees and customers for sharing your content, products, and services online.
The growing adoption of no-code development platforms and creator economy has fuelled more people to pick a business pain point and build lucrative software around it. This proliferation of SaaS is also giving way to new businesses like MicroAcquire and Flippa—marketplaces that let you buy and sell niche startups.
Every best-of-breed software starts its journey as a verticalized, micro-SaaS solution. Micro-SaaS products are the new VC darlings because many category kings and queens are born out of founders that develop obscure micro-SaaS products at first.
Software is a winner-take-all market—the best-in-class software usually ends up gaining a lion’s share of the market, leaving its closest rivals far behind and completely obliterating others out of the competition.
There’s no doubt that best-of-breed software are going to be around forever. But there’s little credibility to the claim that vertical SaaS is the future of software.
No matter how nuanced the offerings, growing businesses that rely too much on best-of-breed software solutions will eventually run into a brick wall.
The inherent problems with best-of-breed SaaS platforms
From the makers’ point of view, purpose-built software is easy to build, sell, and manage. But from a utility standpoint, a best-of-breed software falls short of several things that are critical to running a successful business today.
1. It lacks collaboration capabilities
Merely optimizing a software for individual or the needs of specific function means making way for a siloed workplace. Just look at any business that subscribes to a lot of software: the GTM teams usually prefer Trello or Asana while the engineering team swears by JIRA. This dependency on different point solutions for different teams across the organization often results in problems of collaboration between tools as well as people.
When a team doesn’t have the visibility or permissions to access critical data sitting in a software within the same organization, it always leads to chaos, team conflicts, and bureaucratic hurdles.
2. It fragments customer experience
When a team uses the best-of-breed apps built for their niche, they slice and dice data from only one dimension—i.e., from their lens. They often miss the opportunity to see the big picture because there’s no single source of truth.
When internal teams have a myopic understanding of the customers, they end up delivering a broken buying experience to customers. Let’s say the marketing and sales have a live chat widget installed on your company home page to capture lead data. On the other hand, your customer service team uses a different chat tool on the Help page to funnel support requests.
When a customer follows up with the support team about a product issue that they reported to sales, the service rep might draw a blank because they have no context of the issue whatsoever. The customer ends up repeating their complaint to the support team and contributes to duplicate customer escalations about the same issue.
This is an unlikely scenario when all teams use a common horizontal SaaS tool that democratizes information across teams and functions.
3. It’s difficult to administer
Too many tools in your tech stack is usually an administrative nightmare. If sales is using a CRM software that marketing or customer success also wants to access, your IT department has to buy new licenses and provide access to everyone. That means more licenses, more security risks, and more administrative hassles.
Instead of buying four different tools that need data plumbing, some of which might require additional customization on top of it—it’s just easy to use a single tool that unifies access and improves the overall experience.
4. It’s costly
Buying a standalone software often feels like it’s less costly, but it’s rarely the case for growing businesses. Your business ends up paying more in the long run when each of your teams prefers to use individual best-of-breed software or when you have to buy new licenses to scale its usage. From an ROI perspective, the limited possibilities that a one-trick-pony software offers doesn’t justify the spending in the long term.
5. Data plumbing ≠ native integration
Most point solutions aren’t optimized for interoperability. But when different teams are using different tools, integrating them becomes a necessity so that systems can talk to each other. Software integration is a long-standing norm among businesses, but managing too many integrations often feels like herding cats.
On the other hand, data plumbing between two tools is never as good as native integration between different products in the same suite. Compared to native integration, third-party API integration always has something missing and it often results in a bad customer experience.
A best-of-breed software might not fail at the job that it’s going to do for you. But you will most likely end up hiring more people to manage data plumbing and integrations.
6. It leads to SaaS fatigue
SaaS fatigue is the weariness that teams and businesses suffer from when they have to buy and manage too many software solutions across each department. Most of the above-mentioned problems—high cost, integration inefficiencies, and high maintenance—lead businesses to feel overwhelmed and anxious about using many tools across the board.
Here’s a look at how the usage of SaaS apps have increased across organizations all over the world in the last five years.
When buying best-of-breed software make sense
Best-of-breed solutions are great for single-user requirements like ClassPass (health club aggregator), Substack (newsletter platform), Evernote (note-taking app), or Hyperfury (content scheduler for Twitter). That’s why micro-SaaS apps are growing exponentially and will continue to explode in the B2C domain.
But when it comes to multi-user requirements like communication, collaboration, or coaching—best-of-breed apps fall flat. Collaborative work requires multiple people to exchange data which needs more than one person to use the app. By design, B2B is a highly collaborative environment which is why an all-in-one platform perfectly fits its sundry requirements.
The decision to buy between a best-of-breed vs. an all-in-one software also depends on the stage of growth that your company is at. In general, young startups might not have the scope to leverage an all-in-one platform because a standalone software can usually fulfill their unique requirements.
More mature companies usually prefer all-in-one solutions because they want to continuously optimize for better customer experience and seamless flow of data within their internal teams.
If they are looking to solve a nuanced problem that only a specialized software fulfills, they can get a best-of-breed software to do the job and integrate it with other solutions in their tech stack to get the data flowing across all teams.
How all-in-one SaaS platform offers the best of all worlds
If you ask SaaS customers “what kind of software do you want to buy?”, they will most likely say, “I want to buy the best-of-breed solution because we want the best tool to get the job done.”
Most buyers are concerned with solving an immediate problem at hand and they may not think of the downsides that best-of-breed solutions create in the long term.
But from a buyer standpoint, it makes sense to invest in a jack-of-all-master-of-one platform that can match the strongest capabilities of a point solution while helping you fulfill your software needs in other adjacent areas.
1. It offers a unified customer experience
Buying an all-in-one solution has two-pronged advantages for buyers: it helps you offer a seamless collaborative experience for your internal teams and design a unified brand experience for your end customers.
Your teams can have a unified understanding of the entire customer lifecycle journey only when they have access to customer insights under the same roof. There’s no risk of fragmenting customer experience when data flows freely across the teams who are tethered together to a common software platform.
2. It has less administrative hassles
Although consolidated tools offer different experiences for different teams, it’s just one software to administer and maintain for the procurement or the IT teams.
You just have to set it up and deploy it once—for instance—and it’s a lot easier for the IT team to manage the password policies for the tool. It also simplifies new licensing and renewals since the procurement just has to maintain one billing process for the entire organization. It’s a lot easier to manage an all-in-one software from the data interoperability standpoint.
3. It’s less expensive
From a cash flow point of view, expense is always an important criteria to consider because no business wants to spend a ton of money on buying just one SaaS product. You might think that an all-in-one solution costs more because it natively bundles different product capabilities in a single suite—but it’s not the case.
For instance, many SaaS vendors that sell all-in-one solutions offer piecemeal product experiences that you can buy as a standalone subscription—you’re not forced to purchase the entire range of features unless you need them.
In contrast, truly best-of-breed solutions can come at a hefty price because they are marketed as the crème de la crème tool in their specific category. When you scale, the premium pricing eats into your total software spending—more so, if every team is buying a couple of best-of-breed solutions for their individual requirements.
4. It boosts collaboration
All-in-one platforms facilitate workplace collaboration in ways that best-of-breed apps can’t. ClickUp is one of the best project management tools that demonstrates this capability.
There are so many billion-dollar companies fighting for profit in the project management space—it’s arguably one of the most crowded SaaS markets. ClickUp was one of the last movers to enter the project management space, yet it was 10X better than its competitors.
Up until a few years ago, we—at Avoma—were using Jira for engineering tasks and sprint management while our GTM teams used Asana to manage their projects. As a result, our GTM teams had no clue about the engineering roadmap and the latter team didn’t know about the GTM team’s campaigns. Basically, the collaboration between different teams was broken.
ClickUp—a bootstrapped company—came out of nowhere and made it possible for all teams to manage their projects from within the same dashboard. We are a happy ClickUp customer because all our teams use ClickUp to manage their team projects as well as gain visibility about other teams’ ongoing projects.
For SaaS platforms, all-in-one solutions offer unlimited possibilities
From the business perspective, there is a strong business case for building a horizontal SaaS platform. Software makers can expand to new vertical markets and unlock new revenue potential when they build all-in-one applications.
1. Flexibility to pivot
Building a multi-purpose SaaS product with one or two flagship features will allow your business to stay nimble and pivot to an adjacent market—should there be a need for such a move.
Many software companies are forced to shut their shops or pivot to different markets when there is a threat from a bigger competitor or when their growth saturates over a period of time. Having an all-in-one product foundation (and company mindset) usually gives your company a financial cushion to combat market risks and transition to identify a new viable market segment.
2. More market to capitalize on
Most SaaS companies have a finite TAM (total addressable market) to chase. Due to many factors such as tight competition and an unprofitable customer base (e.g., offline retailers), you might face challenges achieving a desirable market share within the TAM.
Enter all-in-one software capability. Building a holistic software suite will not only allow you to expand your TAM potential and identify new revenue channels, but it will also reduce your customer acquisition costs (CAC) and penetrate adjacent markets without much struggle.
In a vertical SaaS market, the only way to expand your revenue is to acquire new customers or upsell premium subscriptions to existing customers. But if you have a horizontal SaaS platform with good traction for a couple of your products, you can land and expand the existing customer base without additional spend on new customer acquisition.
If you design your all-in-one platform to offer a sticky product experience, you can increase your customers’ dependencies on your solutions and make it hard for them to churn. In that sense, developing a well-rounded all-in-one product suite can also help you improve customer loyalty and CLTV (customer lifetime value).
Many companies have successfully expanded their revenue potential by layering additional products to their core offering. For instance, Veeva (a CRM software for pharma companies) improved its market share by over 50% and ServiceTitan (software providers for home and commercial services management) introduced payment and lending features in its platform which massively improved their customer retention.
3. Lesser risk from competition
All-in-one platforms have a competitive edge over niched-down software applications. The competition between Rippling and Gusto is a textbook example to understand this better.
Until a few years ago, Gusto was among the top software in the payroll management niche—before Rippling ruined it for them. Rippling came in very late in the employee management category, but their product vision helped them challenge powerful incumbents like Gusto in a short time.
When Rippling launched, they decided to pack a bunch of solutions and compete directly with Gusto with their payroll management functionality. Rippling over-invested in their product vision and built useful functionalities to market themselves as a truly horizontal platform.
Suddenly, Gusto—that hadn’t made significant changes in its product offering for a long time—started building new functionalities to its software rapidly and prioritizing new features in response to Rippling’s threat. The folks at Gusto realized that customers are buying from Rippling in droves because they want all-in-one functionalities.
Gusto had a narrow escape from being sidelined in their own niche—thanks to their timely response to the competition.
All-in-one platforms can offer one of their products for a competitive price (or even for free) to acquire an initial customer base that may be otherwise reluctant to convert. They can upsell or cross-sell their core product to them later once they are immersed in the product experience. HubSpot offers a perfect example of how it attracts first-time users with its free CRM and nurtures them to buy advanced products later.
Can best-of-breed solutions grow into all-in-one solutions?
It must have been easy for brands like Rippling and HubSpot to market themselves as an all-in-one platform and add more capabilities to their core offering because they took an all-in-one product vision from day one.
But vertical SaaS companies that don’t envision an all-in-one future don’t have the same luxury. Instead, they have a lot unanswered questions:
- Is it viable to think about building a holistic solution from day one?
- At what point should a product company adopt or start building an all-in-one tool?
- Is it even possible for an existing best-of-breed app to evolve into an all-in-one platform?
It can be a bit challenging—especially on the marketing side—but it’s not impossible. In the past couple of years, some of the highly successful vertical SaaS brands like Toast, Shopify, and Mindbody have added a fintech component to their core product to expand their market horizons and avoid being obsolete.
It certainly helps to have an all-in-one product mindset from the very beginning even if you are only focused on launching a vertical SaaS MVP (minimal viable product) in the short term.
Technically speaking, every all-in-one tool begins its life as a point product. It expands to accommodate more functionalities to its platform based on the customers’ demands and other market signals. Here’s how you can build an all-in-one solution if you want to expand your vertical SaaS capabilities.
When you are building a tech product, it’s like a layered triangle with three major components—the engineering provides the foundation, the product stands like a column in between, and your go-to-market (GTM) strategy is the razor-sharp pointy top.
Let’s understand the role of each of these layers in detail.
The engineering layer
From the product philosophy viewpoint, the engineering layer should be as horizontal as possible. Based on your broader vision, you know what your product is going to look like from the very start. You architect your product and engineering based on that product vision.
Here’s an example. At Avoma, one of the first things that we did during our early days was—we took stock of all the tools in the Conversation Intelligence domain.
We found that many of these tools (e.g. Gong.ai and Chorus.io) catered to a niche audience (i.e., sales) and offered specific use cases (e.g., sales coaching). Then there were horizontal tools (e.g., Dragon Speech and Otter.ai) that were catering to a broader market but were limited to solving only transcription-related use cases.
We felt that none of these tools went beyond the everyday workflows that exist in the real world. That understanding helped us design a product that spans across different business functions and meets a wide range of use cases ranging from voice-to-text transcription to collaborative note editor and AI-generated notes to deal intelligence.
The product layer
Don’t over-architect your product in the early days of your startup journey. It’s important that everyone in your core team is aware of the broader product vision for the future, but that doesn’t mean you develop all the possible functionalities when you are just starting out.
You’re better off restricting your product to a few use cases and have the flexibility to build other capabilities later based on your customer response and other business insights.
Just look at how ClickUp did it. Because they had the right vision from the inception, they built an engineering architecture from the very start that could support their all-in-one capability. ClickUp became so popular in such a short period that they started giving a hard time to other heavy-hitters in the project management domain such as Asana and Monday.com.
The GTM layer
Finally, GTM is the sharpest layer in the triangle because it means you have to focus on identifying a specific user persona where the pain is the highest. For us at Avoma, we knew that our product was horizontal and could cater to a wide set of knowledge workers.
But we took a call and narrowed down our GTM initially to sales because the note-taking behavior was most valuable for salespeople. Later, we started targeting other functions like customer success because we realized that they also have similar pain around note-taking and call transcription. Thankfully, we only had to tinker with a few things here and there to appeal to market ourselves to the customer success teams.
On the other hand, we deliberately left out other knowledge professions like students and professors because they didn’t fit into our vision for the product—although they are dormant markets we can explore later.
Transitioning your branding from being a specialized tool to all-in-one can be a bit challenging, especially if your brand name is biased towards a specific niche—such as Marketo or Salesforce.
We were lucky on that front too because the name “Avoma” doesn’t mean anything in itself. If you are not familiar with the origin of Avoma’s brand name, it’s actually an acronym for A Very Organized Meeting Assistant. It’s short, easily rolls off the tongue, and piques people’s intrigue.
The point is—it’s easier to reposition yourself in the market if there’s no inherent bias in your brand name. For instance, it aided us in extending Avoma to customer success and product teams because we didn’t have a sales-specific branding in our name.
It all boils down to having that early vision of building an all-in-one vision from the very start because it impacts all other future decisions such as engineering architecture, product roadmapping, and GTM strategy.
What will you choose?
Regardless of how popular all-in-one software are, best-of-breed solutions will always be around. For instance, certain markets like healthcare and government have nuanced compliance and data security requirements that all-in-one platforms may not be able to meet.
But in general, best-of-breed tools that don’t offer interoperability will fade into obscurity because today’s SaaS users operate in an increasingly collaborative environment where data operability is critical to their business needs. In that sense, all-in-one SaaS is the future you can bet on.